Buying in Lone Tree and hearing a lot about earnest money? You are not alone. This small deposit plays a big role in getting your offer accepted and keeping your deal on track. In this guide, you will learn how earnest money works in Colorado, what amounts are common in Lone Tree, how to protect your funds, and when you can get them back. Let’s dive in.
Earnest money basics in Colorado
Earnest money is a buyer’s good‑faith deposit. It shows you are serious about purchasing and is credited toward your costs at closing if the deal goes through. If the contract is properly terminated under your contingencies, the money is typically returned. If a buyer defaults, the seller may be able to claim the deposit depending on the written contract.
In Colorado, the Contract to Buy and Sell Real Estate (commonly the CAR form) sets the amount, who holds the deposit, when it is due, and the deadlines that control refunds or forfeiture. Brokers are regulated by the Colorado Division of Real Estate, and title companies follow trust‑account rules. Most practical timelines flow from what you and the seller agree to in writing.
Contingencies are your key protections. These include inspection, appraisal, financing, and title review. If you follow the contract’s steps and timelines, you can usually terminate and recover earnest money for issues covered by those protections.
Typical amounts in Lone Tree
In Colorado suburban markets, buyers often use about 1% of the purchase price as a rule of thumb. In competitive situations, you might see 2–3% to strengthen an offer. For condos or lower‑priced homes, a fixed amount such as $1,000 to $3,000 is common.
Lone Tree sits in southern Denver metro with many homes in the mid‑six to low‑seven‑figure range. Sellers here often expect proportional deposits near 1% or more. In busier periods, buyers sometimes pair larger deposits with tighter timelines to stand out. Just remember that bigger deposits increase risk if you miss a deadline.
Hypothetical Lone Tree examples
Example A — Condo listed at $425,000 (hypothetical)
- Earnest money: $2,500 (about 0.6%).
- Deposit due: within 3 business days of acceptance.
- Inspection: 10 days. Financing approval: 21 days.
- If you terminate during inspection per the contract, the deposit is returned.
Example B — Single‑family listed at $650,000 (hypothetical)
- Earnest money: $6,500 (1%).
- Deposit due: within 2 business days.
- Inspection: 10 days. Financing commitment: 30 days. Closing: 35 days.
Example C — Competitive $750,000 listing (hypothetical)
- Earnest money: $22,500 (3%) and possibly an additional non‑refundable deposit if negotiated.
- Shorter inspection period: 5–7 days and tighter financing terms.
- Higher deposit and shorter windows can strengthen your offer, but increase risk.
Timelines and key deadlines
Your contract sets the clock. Many Colorado offers require delivery of the earnest money to the named title or escrow agent within 1–5 business days of acceptance. Two business days is common, but always follow your written deadline.
Inspection and objection windows are often 7–14 days, with 10 days common. Financing commitments typically land in the 21–30 day range, and the appraisal usually happens during that financing window. Total contract‑to‑close often runs 30–45 days for standard loans.
Use a simple checklist to stay on track:
- Calendar the deposit deadline the moment your offer is accepted.
- Add inspection, appraisal, financing, and title deadlines with reminders 48 hours ahead.
- Decide early how you will resolve findings, then deliver notices in writing before each deadline.
Where the deposit is held
In Colorado, a title company or closing agent commonly holds earnest money. Sometimes a designated escrow agent or a brokerage account is used. Once you deliver funds, they are placed in an escrow or trust account until closing or contract termination.
What to get in writing:
- A receipt that shows the amount, the date and time received, and the property address.
- Confirmation that funds are in an escrow or trust account.
- Later, verify the deposit appears as a buyer credit on your settlement statement.
Wire safety and fraud prevention
Wire‑fraud scams are real in real estate. Protect yourself with a few habits:
- Verify wiring instructions by phone using a known phone number from the title company’s official materials. Do not rely only on email.
- Be cautious with last‑minute changes to wiring details and re‑verify directly by phone.
- Use two‑factor authentication on email and bank accounts.
- If allowed, consider a cashier’s check or in‑person deposit to reduce digital risk.
Refunds, defaults, and “non‑refundable” terms
If you terminate under a valid contingency within the deadline and follow the contract’s steps, earnest money is typically refundable. Examples include inspection issues you choose not to accept, loan denial under a financing contingency, or a title issue that is not resolved.
“Non‑refundable” terms are sometimes used in competitive offers. Buyers may agree that a portion of the deposit becomes non‑refundable after a milestone, or that the seller can keep the deposit as liquidated damages if the buyer defaults. Only agree to terms you fully understand, and keep your contingency dates tight.
Common risks and how to avoid them
Low appraisal: If your appraisal or loan contingency allows termination for a short appraisal and you act within the deadline, your deposit is typically returned. If you waive protections, your deposit could be at risk.
Closing delays: Delays alone do not forfeit your deposit. Risk arises if you miss a deadline or default and the seller elects a remedy allowed by the contract. Communicate early and update timelines in writing if needed.
Seller breach: If a seller fails to perform under the contract, you may be able to terminate and recover your funds or pursue other remedies according to the contract. Follow the notice procedures exactly.
Best practices for Lone Tree buyers
- Choose an agent who uses CAR forms and understands Douglas County norms.
- Right‑size your earnest money to the price point and competition level.
- Specify who holds the deposit and the exact delivery deadline in your contract.
- Track inspection, appraisal, financing, and title deadlines in a shared calendar.
- Deposit funds with a title or escrow company and get a written receipt immediately.
- Independently verify any wiring instructions by phone and keep transfer records.
- If considering non‑refundable or larger deposits, discuss the risk with your lender and consider legal advice.
Ready to put a smart, safe offer together in Lone Tree? Reach out to Michael Gordon for calm, local guidance from first showing to closing.
FAQs
How much earnest money is typical in Lone Tree?
- Many buyers use about 1% of the purchase price, and go to 2–3% in competitive situations, with lower fixed amounts common for some condos.
When is earnest money due in Colorado contracts?
- The contract sets the deadline, often within 1–5 business days after acceptance, with two business days common in practice.
Who holds earnest money for Lone Tree purchases?
- A title company or closing agent usually holds it in an escrow or trust account, though a brokerage or designated escrow agent may be named.
When can a buyer get earnest money back?
- If you terminate under a valid contingency such as inspection, financing, appraisal, or title within the contract deadline and proper notice, it is typically refundable.
What does a non‑refundable deposit mean to a buyer?
- You are agreeing that some or all of the funds will not be returned after a set milestone or in the event of default, which increases risk and should be clearly written.
How do I avoid wire‑fraud when sending my deposit?
- Always verify wiring instructions by calling a known phone number for the title company, watch for last‑minute changes, and use two‑factor authentication.
Do closing delays put my deposit at risk?
- Delays alone do not forfeit funds, but missing deadlines or defaulting can; communicate early and update timelines in writing if needed.
